Fair Housing Asistance Program

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

FAIR HOUSING AND EQUAL OPPORTUNITY

FAIR HOUSING ASSISTANCE PROGRAM

1. SUMMARY OF BUDGET REQUEST

The fiscal year 2000 Budget request for the Fair Housing Assistance Program (FHAP) is $20 million. This is an increase of $3.5 million over the fiscal year 1999 appropriation which will be used to fund an innovative Fair Housing Partnership between State and local government fair housing enforcement agencies and private fair housing groups. The Department is proposing this Partnership focused on underserved populations to ensure that persons who face language, cultural, and other barriers have the full protection of the Fair Housing Act. The focus is expected to include racial and ethnic minorities (e.g. immigrants), rural populations, persons with disabilities, and homeless persons. The Department will carry out this initiative through the existing Fair Housing Assistance Program and the Fair Housing Initiatives Program.

This Partnership initiative will be funded equally by the FHAP and the Fair Housing Initiatives Program (FHIP) through a combined $7 million set-aside. (See the FHIP justification for a description of the FHIP component of the Fair Housing Partnership.) Through its support of joint efforts by governmental and private entities, the partnership initiative will foster substantial and new fair housing results that individual organizations could not achieve alone.

The balance of the $20 million requested for fiscal year 2000 will support the activities of approximately 90 substantially equivalent fair housing enforcement agencies, an increase of 5 over the 1999 level. These agencies will process housing discrimination complaints based on race, color, religion, sex, familial status, disability, and national origin.

The fiscal year 2000 appropriation will be used to assist "substantially equivalent" agencies in case processing, data and information systems, training, capacity building activities, and education and outreach, in addition to the activities supported by the partnership initiative. A "substantially equivalent" agency is a State or local fair housing enforcement agency administering a fair housing law or ordinance that is substantially equivalent to the Fair Housing Act (Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988). The FHAP complements the Department's enforcement activities by providing financial assistance to these agencies pursuant to the Fair Housing Act.

Despite more than 30 years of prohibitions against housing discrimination, audits of race and national origin discrimination in the rental and sales market continue to show high indices of discrimination nationwide. Although national homeownership rates have increased, a significant disparity continues to exist between the homeownership rate of Whites compared to that of minorities: 72 percent rate of Whites are homeowners, compared to a rate of less than 45 percent for Hispanics and Blacks. Home mortgage disclosure data indicate that lenders still reject Black and other minority applicants almost twice as often as Whites. Builders continue to construct housing which inaccessible to those with disabilities, and families with children in certain parts of the United States have extremely limited housing choices due to discrimination. Many cities with large populations continue to have no public or private fair housing organizations. Certain protected classes are not aware of their rights under the Fair Housing Act, while certain housing industry players are unfamiliar with their responsibilities under the Fair Housing Act. These conditions are addressed by the President's "One America" initiative, which recognizes continued significant barriers to equal housing economic and social opportunity for many groups in our society. Eliminating these barriers and creating conditions of equal opportunity is at the core of the Federal Government's role in forging an "opportunity" society for all Americans. This request reflects the Department's focus on eliminating housing and lending discrimination, which is vital to making homeownership and economic opportunity a reality for all Americans.

To receive a portion of the proposed Fair Housing Partnership set-aside, State and local fair housing enforcement agencies and eligible private groups will be required to submit applications outlining the duties of each applicant, and the process by which each will work with the other partners. The partnership will require State and local enforcement agencies and private groups to engage in strategic planning in order to focus their fair housing activities. Further, they will be required to coordinate their activities to avoid duplication and ensure the results of their partnerships make a maximum contribution to the Department's goal of increasing its enforcement. Successful partnership applications will be funded by both FHIP and FHAP, allocating funding to enforcement and/or education initiatives.

Private fair housing groups (FHIPs) and State and local enforcement agencies (FHAPs) have different strengths and institutional orientations. Private fair housing groups have traditionally been community-based, and therefore more accessible to individuals who would not ordinarily approach a government entity. They also do not have enforcement authority, such as subpoena power, to fully investigate apparent violations of the Fair Housing Act. In contrast, State and local agencies have such enforcement authority. However, they have had only limited success in reaching out to underserved populations. The Partnership is intended to create a new synergistic approach to draw upon the resources and strengths of both partners. Under the Partnership initiative, State and local agencies will be able to carry out enforcement activities beyond case processing. Special enforcement efforts will include joint investigations of the following activities: (1) discriminatory lending practices; (2) noncompliance with design and construction requirements; and (3) hate crimes.

The Budget also proposes a fiscal year 2000 appropriation of $27 million for the Fair Housing Initiatives Program (FHIP), of which $3.5 million is for fair housing partnership projects. The total funding requested for both programs in fiscal year 2000 is $47 million. Together, these two programs form a national comprehensive fair housing strategy against housing discrimination based upon greater cooperation between the public and the private sectors.

2. CHANGES IN THE 1998 ESTIMATES INCLUDED IN THE 1999 BUDGET

The expected number of agencies qualifying for equivalent status in 1998 was 80. This represents no change from the 1999 Budget. The 1999 Budget estimated 1998 obligations at $22.7 million. Actual obligation in 1998 were $14.7 million, reflecting obligation at a slower rate than anticipated. Outlays in 1998 were $11.5 million, $5.6 million greater than projected. This was due to agencies drawing-down funds at twice the expected rate.

3. CHANGES FROM 1999 BUDGET ESTIMATES

The change in budget authority, from $23 million to $16.5 million, reflects Congressional action. Obligations are expected to be slightly higher at $24 million, $1 million more than shown in the 1999 Budget. This increase reflects the net of $7.5 million carryover offset by the $6.5 million lower appropriation. Outlays are estimated at $9.5 million, $4.3 million less than shown in the 1999 Budget. The reduction in the estimate is due to obligations being liquidated at a faster rate than previously anticipated in fiscal year 1998.

The fiscal year 2000 appropriation request for the Fair Housing Assistance Program (FHAP) represents an increase of $3.5 million over the 1999 appropriation of $16.5 million. The $3.5 million increase will fund a Fair Housing Partnership between State and local government fair housing enforcement agencies and private fair housing groups. This partnership will strengthen fair housing enforcement at the local level, and will result in more cases being filed directly with the Department. Examples of activities under this initiative include outreach by FHIP groups in areas where FHAPs have no physical presence, and training by FHAP agencies to community-based groups in order to expand the reach of FHAPs. The fiscal year 2000 funding request will reach new and underserved populations, including racial and ethnic minorities, immigrants, rural populations, persons with disabilities, and homeless persons. In fiscal year 1999, a total of 85 State and local fair housing enforcement agencies will be eligible for funding as substantially equivalent agencies. The Department estimates that at least five additional agencies will be certified in fiscal year 2000.

The Fair Housing Assistance Program (FHAP) is a proven and successful vehicle for the Federal Government to encourage and assist State and local fair housing enforcement agencies to participate in the enforcement of the Fair Housing Act. FHAP agencies meeting specified criteria are reimbursed for services carried out in connection with the investigation of complaints brought by individuals who claim their fair housing rights have been violated. These services include complaint investigations, conciliation, administrative enforcement/judicial proceedings, training and outreach, technical assistance, and other support activities designed to eliminate housing discrimination. Eligible recipients are defined as those State and local fair housing enforcement agencies that are certified as substantially equivalent, or agencies operating under an interim agreement for referral of complaints. The availability of this Federal financial assistance has encouraged State and local agencies to enact equivalent fair housing laws and ordinances.

1. Legislative Authority. The Fair Housing Act prohibits discrimination in the sale or rental of housing; in residential real estate-related transactions; in the provision of brokerage services; and in other housing-related activities. Section 810(f) of the Fair Housing Act allows for the Secretary to refer complaints to the FHAP agency whenever a complainant alleges a discriminatory housing practice within the jurisdiction of the State or local agency that has been certified as providing rights, remedies, procedures, and the availability of judicial review which are substantially equivalent to those in the Fair Housing Act. Section 817 of the Fair Housing Act provides that the Secretary may assist State and local agencies in administering a fair housing law by providing them with financial assistance.
2. Program Background. Since 1980, the Department has provided financial assistance under the FHAP to State and local agencies administering substantially equivalent fair housing laws and ordinances. When the Fair Housing Amendments Act was enacted in September 1988, all State and local agencies were required to amend their respective laws and ordinances to obtain substantial equivalency certification with the amended Federal law.

The Fair Housing Act mandates that the Department cooperate with and render technical assistance to State and local agencies formulating or carrying out programs to prevent or eliminate discriminatory housing practices. Section 810 of the Fair Housing Act specifically encourages cooperation with State and local agencies charged with the administration of State and local fair housing laws. The Fair Housing Assistance Program and the substantial equivalency certification process both serve to further fair housing by providing financial assistance and by encouraging State and local governments to enact and enforce legislation designed to ensure fair housing. Through training, legal, and administrative technical assistance, issuance of written guidelines, participation at meetings and conferences, and review of proposed legislation, the Department provides extensive assistance to help State and local fair housing enforcement agencies obtain certification under the Fair Housing Act. The Department also provides individually tailored technical assistance to any State or local government requesting such assistance.

The implementing regulation for the FHAP, 24 CFR part 115, requires that the fair housing law administered by the agency be substantially equivalent and that a written agreement be executed. Also, agencies that participate in the FHAP must (a) conform to reporting and record-keeping requirements; (b) agree to on-site technical assistance and guidance and implementation of corrective action; (c) adhere to policies and procedures provided by the Department; (d) not unilaterally reduce the level of financial resources currently committed to complaint processing; (e) spend at least 20 percent of its total annual budget on fair housing activities, and; (f) participate in HUD-sponsored or HUD-approved training. FHAP funds are divided into two categories: capacity building and contributions. Agencies receive capacity building funds in their first 3 years of participation in the program. The agencies become contributions agencies after the third year of participation in the FHAP. At that time, they are also eligible to receive case processing, training, special enforcement efforts, and administrative costs funds. Beginning in fiscal year 2000, a fifth component for fair housing partnership funded activities will be established under contributions.

Financial assistance to State and local fair housing enforcement agencies is contingent upon continued substantial equivalency. Substantial equivalency involves an affirmative conclusion on two separate issues: (1) whether the State or local law provides rights, remedies, procedures, and the availability of judicial review that are substantially equivalent to those found in the Fair Housing Act, and; (2) whether the agency has the administrative capability to carry out the provisions of its fair housing law.

All certified agencies will process complaints based on race, color, religion, sex, national origin, familial status, and handicap. This effort will require such agencies to commence and maintain the processing of each complaint through administrative and/or civil proceedings. The agencies will enter into partnerships with private fair housing groups to test for discrimination, and provide investigative assistance or any other assistance needed in order to further fair housing.

The $20 million funding level for agencies participating in the FHAP for fiscal year 2000 will be allocated as follows:

Case Processing--$11.2 million. It is estimated that in fiscal year 2000, FHAP agencies will process approximately 60 percent, or 6,000 complaints, of the total 10,000 complaints expected to be received by the Department. This amount covers the costs incurred by the FHAP agencies to process complaints from receipt through the administrative and/or civil proceedings. For each complaint correctly processed, the agency will be paid $1,800, the same amount paid per complaint in fiscal year 1999. In addition to the $1,800 per complaint, the Department is proposing to add $1,000 per case for which the agency finds cause. This amount will cover the additional costs which result from preparing a case for hearing and from conducting a hearing and trial. The Department estimates that approximately 400 cases will fall into this category.

The Department expects to certify 90 State and local fair housing enforcement agencies as substantially equivalent in fiscal year 2000, up from 85 in fiscal year 1999.

Capacity Building--$1.38 million. The requested funds will be used in fiscal year 2000 to enable approximately 12 capacity-building agencies to develop and enhance comprehensive complaint processing resources, to train staff, and to develop and carry out activities deemed necessary for the efficient and effective implementation of the jurisdiction's fair housing ordinance. Each FHAP agency would receive $115 thousand.

Training--$1.95 million. All contributions agencies, which are agencies that have participated in the FHAP for 3 or more years(approximately 68 agencies), are eligible to receive training funds to support participation in HUD-sponsored or HUD-approved training and education and outreach activities. During fiscal year 2000, agencies may receive approximately $25,000 each for training. In addition, each of FHEO's ten "Hubs" will have access to approximately $25,000 in order to supplement the training needs of FHAP agencies.

Administrative Costs--$.97 million. The Department will allocate administrative costs to the agencies using a formula based on the number of complaints correctly processed in the previous funding year. If the agency does not meet the standards set out in Part 115 of 24 CFR for allocation by formula, a flat rate of $15,000 will be provided to the agency for administrative costs.

Special Enforcement Efforts (SEE)--$1 million. Agencies qualify to receive SEE funds based on the criteria in Part 115.305 of 24 CFR. These funds are designed to help the agencies enhance their enforcement processes. The amount each agency will be eligible to receive will be based on a formula of 20 percent of the previous year's cooperative agreement. Approximately 60 percent of the agencies will be eligible to receive funds in this category.

Fair Housing Partnership Category--$3.5 million. FHAP agencies may apply to qualify for funding under this category, based on criteria provided in the policy guidance outlined for this partnership. Funding will be available for partnership efforts that address discrimination against new and underserved populations. Such efforts may include activities other than those reimbursed under other program components, and may extend beyond complaint processing reimbursement. It is estimated that as many as 30 FHAP agencies will receive awards under this Fair Housing Partnership Component.

Performance Indicators. The Department continues to support the doubling of enforcement actions as a performance goal. However, the doubling of enforcement actions is an ongoing process and a standard definition of enforcement actions is still being developed. The request will increase the number of State and local agencies which administer laws which are substantially equivalent to the Fair Housing Act from 80 in 1998 to 85 in 1999 and 90 in 2000. In fiscal year 2000, the request will, for the first time, jointly fund (through the FHAP and Fair Housing Initiatives Program) fair housing partnerships of up to 30 substantially equivalent agencies and private fair housing groups. These partnerships will maximize resources and strengthen fair housing outcomes at the State, local and community level. The requested level of funding will enhance the quality of fair housing enforcement by State and local agencies by providing training and by providing final and technical assistance on testing, investigations, and resolution techniques to 80 agencies in 1998, 85 agencies in 1999, and 90 agencies in 2000.

A number of significant accomplishments have occurred to support fair housing agencies. These accomplishments include:

• FHEO, together with the Office of General Counsel (OGC), reviewed proposed and enacted fair housing laws and ordinances, and proposed and final regulations, legal opinions, and court cases of jurisdictions seeking equivalency. This process allowed FHEO to assist State agencies to enact substantially equivalent laws by providing clear and concise guidance and suggesting corrective actions that may be undertaken by the agency.
• FHEO has provided a model fair housing ordinance to jurisdictions seeking equivalency to assist them in writing and enacting a substantially equivalent law or ordinance.
• FHEO has provided technical assistance and training to FHAP agencies operating under an interim agreement to ensure successful performance in accordance with standards set forth in the Department's regulations.
• FHEO has provided on-site technical assistance and performance assessment visits to all agencies with interim certification. In each instance, detailed reports and guidance were provided to the agencies.
• FHEO continues to provide policy guidance and formal training to the FHAP agencies. The training includes investigative techniques, conciliation enforcement and intake procedures, data and information systems, legal updates, disability and familial topics, and other issues which serve to educate the agencies on the implementation of fair housing laws. The field offices provided agency-specific training as well as geographic training. The training was also expanded to include participation by private fair housing organizations.
• FHEO has provided computer software and hardware, as well as other training to assist the agencies in improving the efficiency and effectiveness with which they enforce the fair housing laws. These improvements include the use of the paperless file to organize and document investigation activity, and an enhanced case-tracking system.
• FHEO has provided technical assistance to several FHAP agencies whose equivalency status was severely jeopardized and assisted these agencies to retain their status as interim certified or certified agencies.
• FHEO and OGC assisted a State agency which lost its certified status to regain it.
• FHEO worked with several FHAP agencies whose cases drew significant national media attention due to the compelling nature of the facts.
• In 1998, FHEO worked closely with the State FHAP Agency in Texas and the local FHAP Agency in Fort Worth (which had also received FHIP funds) to settle a fair housing complaint that resulted in the largest monetary settlement ever in the history of the Fair Housing Act. The availability of Federal Funds under the FHAP and FHIP made it possible to fund an in-depth study of mortgage lending practices in Texas. The findings resulted in a landmark $1.4 billion settlement against Texas lenders. The Department predicted that as a result of the settlement, approximately 20,000 families would be able to secure mortgages over a 3-year period.

STATUS OF FUNDS

1. Unobligated Balances. The following table compares program obligations with funds available by year:

2. Obligated Balances. The status of obligated balances is as follows: